Out of bounds

Like a teenager hitting puberty, Spokane is growing, always growing, and feeling confined. There's no question that the city of Spokane's population will rise; the state estimates as many as 54,000 people will move into city limits within the next 20 years, plus 12,000 or more in the immediate suburbs. The question is where will they go?

Spokane County commissioners say new city residents can fit inside the existing city limits. City officials say Spokane must expand or wither. The result is a dispute that's thrown the city's growth plans into doubt after years of assuming annexation of some outlying areas like the North Metro and Moran Prairie neighborhoods.

Here's what happened: As ordered by state law, Spokane County and the cities within it have been negotiating for years how to draw their urban growth area (UGA) boundaries -- that is, outlining where they think people will build houses and start businesses. Meanwhile, the county and city have divvied up services to border residents. The city built water and sewer lines for them with the assumption that this was paving the way for annexation.

"We need to grow in order to survive," explains John Mercer, Spokane's planning director. Given the concentration of poverty within the city and the need for city services, "We have demands that grow and revenue that falls. Unless we can reverse that trend, we're going to be in a downward spiral."

In a surprise decision on Aug. 24, the commissioners voted to keep the city's UGA at its city limits -- in other words, denying their cooperation for annexation and new city growth. The commissioners say the city can't prove it can provide services to new residents outside its existing limits.

Two weeks later, on Sept. 6, Spokane Mayor John Powers ordered a halt to the city's long-standing policy of extending city water and sewer to county residents in border areas. He followed that decision with a letter to the commissioners co-signed by City Council President Rob Higgins. The no-new-hookups decision was necessary, they wrote in the letter, because city planning policies passed this spring -- which have force of law -- do not allow them to extend services beyond the new UGA.

No new growth? Well, then no more city utilities!

The policy of limiting new hookups has a lot of leverage. The county must step in, footing the bill for expensive water mains and sewer pipes if the city refuses, says Bruce Hunt, a long-range planner for the county.

While the leaders negotiate, several families and businesses say they cannot build now, since they are cut off from these expected services.

"Currently it is holding up a sizeable number of our members," says Mark Richard, government affairs director for the Spokane Home Builders Association and the Spokane Association of Realtors.

At least 17 builders and developers have told Richard the border dispute has held them up from building homes and businesses, including one 40-acre regional shopping center in the works.

At issue in the city-county dispute is... well, there are a lot of things at issue here. Growth-planning laws are at issue for the city, but so are the rights of county residents whose homes the city plans to annex someday. For each issue, there are legal gray areas and varying interpretations. Despite also having internal disagreements, however, officials on both sides are meeting and talking about a resolution.

"It's a moving target, because you have so many individuals who have so many ideas," says County Commissioner John Roskelley. "There's three commissioners, seven council members and a mayor, and they all have different opinions."

POWER

Blow away all the legal smoke and the bottom line of this dispute is taxes. City officials fume that many busy commercial areas where millions in sales taxes are generated sprawl in unincorporated county land along the city's border. Big-box stores perch just outside city limits, including the stores along the east side of Havana Street, or just beyond, like the Home Depot on East Sprague and Fancher. Or drive along Division Street with its teeming shoppers some Saturday, north of Francis Avenue. Shops to the right are in city land. To the left, they're all in the unincorporated county.

Those stores take advantage of city services, says City Attorney Mike Connelly, who is working with the county's legal department to clarify the issues at hand. "City water, city sewer. City streets are taking the people there for the most part, and we're not getting any taxes."

Those sales taxes are considerable: This year alone they are expected to bring in $25 million to the city's general fund -- nearly a quarter of the entire budget, and slightly more even than property taxes.

Taxes are at issue, then, and so is power. The kind of power needed to meet budgets, provide services and guide destiny. These are urgent needs for the City of Spokane, which expects the 2002 budget to be tight enough that it might cut jobs, says Mayor John Powers.

"Definitely, that's a big issue," says Powers.

The city has agreements with some fire districts not to seek annexation until 2002, but clearly the city is now champing at the bit to get the process going, especially in light of the gloomy budget picture that has emerged in recent months.

The county commissioners dismiss the idea that they considered tax implications in their UGA decision, maintaining that they're supposed to question the city's ability to provide services to growth areas and to protect county residents' right to vote over annexation. But informed observers, even within county government, say those arguments don't reflect the central issue. Last year, 3,600 people left the county tax rolls when Liberty Lake incorporated, and there's talk of incorporating thousands more within a new Spokane Valley city.

The county is bleeding taxpayers, and Spokane wants to take more.

LIFE and DEATH of a CITY

Annexation and control of tax bases are perennial issues. Growth management laws just make working through them a more complex affair, says county planner Hunt.

Planners and elected leaders have negotiated for years to avoid the kind of dispute in which they now find themselves. There were plans like the agreements to split utilities, the city's recently adopted comprehensive plan and the UGA negotiations themselves.

Planners drew up many agreements regarding county residents living near the city limits, in so-called joint-planning areas. These residents would be first to be annexed, and number about 12,000, perhaps doubling in the next 20 years.

Many of these residents enjoy the best of both governments: city water and sewer, and often much better county roads. It's time for the urbanizing county areas to pay their way, Spokane city officials say, by joining the city.

Mercer, the city's planning director, was previously a 22-year veteran planner with the county. The idea was always that the city's sewer and water lines were an investment that would pay off in future annexation, Mercer says.

"That was the whole concept. Over the next 20 years, these areas would be places we would grow," he says.

County commissioners don't entirely agree; Commissioner Kate McCaslin, for one, says the idea was simply to provide adequate service, with annexation an open question. It still is, she says, but the county won't approve the city's expansive growth boundary because city officials haven't proven they can provide services there.

The UGA boundary question, says McCaslin, "is a red herring."

All the city has to do is hold a vote and legally annex the areas it wants or needs to grow, she says. McCaslin's comment about a vote represents a fallback position, that even if this dispute goes the city's way, a vote would still be required for it to claim new territory. That may not be the case, however, as the city has covenants with many of those who hooked up to city services, saying that when the time came, they would not oppose annexation. But unless the county loosens up the UGA to allow for annexation, it may be moot, as the city says growth laws keep it from annexing land outside the UGA boundary. County officials, however, say the city is misinterpreting those laws.

"Our position is they can annex outside the area... The city is saying in some way we are keeping them from growing, but that's certainly not true," says McCaslin.

The city has eyed areas for possible annexation, north, south, east and west, including residential areas. West Plains holds tracts of industrial land and open sites that beckon, given the city's lack of industrial space, says Mercer.

There are two ways for a city in Washington to annex new land. One is to win a simple majority vote of the residents in the proposed new city area. The other is the petition method, which requires 75 percent of assessed property value in the area to be under covenant, or pre-existing agreement. Those covenants change hands with each parcel.

Which method Spokane might use depends on the neighborhood in question. Some, but not all, have covenants.

Commissioner Roskelley says the city is getting stuck on policy it could get past by interpreting it a bit more loosely.

"They read the [state growth law] maybe a little different than we do," says Roskelley, adding, "We have the ability to resolve this if we have the will."

The county does have authority to draw the UGA, says Dave Williams, a lobbyist with the Washington Association of Cities, which is intimately involved with growth issues. Drawing that boundary to exclude new city growth, however, "makes no sense," he says. The idea of state-mandated growth planning law was to channel urban growth into cities, preserving rural areas from sprawl.

Consider Vancouver, which many expect to replace Spokane sometime soon as Washington's second largest city. Like Spokane, it extended its water and sewer lines like the columns of an advancing army. Using covenants signed by those who hooked up to those utilities outside the city limits, Vancouver has doubled in size in the past decade, according to Williams. It aggressively annexed large tracts of land, including a shopping mall, all with the cooperation of the county government.

Why would a county accede to the loss of its land? Revenue-sharing, says Williams. Many places have negotiated settlements to their growth fights by agreeing for the enlarging city to split the sales tax money it collects on its new territory with the county, allowing the city to pay for growth and the county to cushion the impact of the loss.

If taxes are indeed in the middle of this community's labyrinthine growth-management dispute, Williams' example will likely resonate with policy-makers on both sides as a way out.

RESOLVE

Despite fundamental differences of interpretation regarding the UGA and its impact, city and county leaders are trying to come to an agreement. Council members and commissioners have met, as have city and county lawyers, in what Powers calls a "very productive" series of discussions.

Some observers say county commissioners may not have thought Powers would stand fast -- but that's what a strong mayor is supposed to do if it's the right thing, he says. So if annexation is crucial to the city's long-term health, why are some members of the city council criticizing Powers? People running for the council have widely varying opinions about Powers' decision and his letter to county commissioners.

"Did it achieve its goal of getting the commissioners' attention?" asks Al French, who's running for the council. "Yes, it did. Was it a big hammer? Yes, it was."

Cherie Rodgers supports annexation, but believes the mayor overstepped his authority in his actions.

Then there's candidate Jeff Colliton, who says Powers' decision is wrong and that the city should honor its plans to provide service. But the commissioners are wrong, too, he believes.

"After living up to the previous agreements, we should definitely play hard ball with the county," says Colliton.

The city council is expected to discuss the matter at its Nov. 5 meeting, and some members actively oppose the Powers approach. Lawyer and City Councilman Steve Eugster has filed a lawsuit in Spokane County Superior Court seeking a judge's prohibition against the city's no-new-hookups stance.

A court will later decide if Eugster's suit has legs.

The city's position is that Powers and Council President Higgins did nothing more than communicate to the county commissioners problems raised by their decision limiting the UGA boundary, says Connelly, the city's attorney. "All they did was raise the question."

Plenty of people have raised numerous questions in this matter. It's the answers that are proving trickier to find.